Ivan Glasenberg announced his latest round of results as Managing Director of Glencore by restoring the company’s dividend and increasing the prospect of further cash returns if commodity prices remain high.
Glencore withdrew its annual dividend in August as it invested money in oil trading to take advantage of volatile market conditions. That saw the group’s net debt soar to nearly $ 20 billion, well above a target range of $ 10 billion to $ 16 billion.
As the big oil trades took place during the year, that figure fell to $ 15.8 billion, allowing Glencore, which released better-than-expected annual results on Tuesday, to announce a dividend of 12. cents per share, worth nearly $ 1.6 billion.
“Given the current strong levels of operating cash flow at Glencore. . . the board would consider special ‘top-up shareholder distributions’ for 2021, alongside its interim results for August, ”said Glasenberg, who will be one of the biggest beneficiaries of the restored dividend.
The former coal trader owns more than 9% of the $ 53 billion company and will receive dividends worth $ 144 million. He will step down after two decades at the helm of the Swiss-based company and will be replaced by one of his protected Gary Nagle, Glencore’s head of coal assets.
Glencore’s dividend is determined by its performance over the previous 12 months and is paid in two equal installments over the following year. In this case, end of May and September. As such, the economic environment may be different from when Glencore declares a dividend and makes the payment – as was the case in 2020.
The resumption of payments comes against a backdrop of rising commodity prices, which are pushing up profits and share prices in the mining sector. Glencore is up 150% from its low of Covid-19 in March.
Some big Wall Street banks believe commodities are in the first stage of a new Sectoral “bull market” fueled by government spending focused on green infrastructure and tackling income inequalities.
Glencore said on Tuesday that adjusted profit before interest, taxes, depreciation and amortization – a measure followed by analysts – reached $ 11.6 billion in December, unchanged from a year ago, on revenue of 142 billions of dollars. Profits were about $ 1 billion higher than market forecasts.
Glencore’s ‘marketing’ arm achieved a record performance as a listed company, reporting earnings before interest and taxes of $ 3.3 billion as its traders took advantage of the turmoil created by the coronavirus in the oil markets and metals.
However, Glencore recorded a net loss of $ 1.9 billion for 2020, going from a loss of $ 404 million the year before after taking on a series of non-cash impairment charges on coal and mining assets. copper. These totaled $ 5.7 billion.
Nagle is expected to outline his strategy for the company this year, although analysts and investors do not expect big changes.
In Tuesday’s earnings statement, Glencore said its climate strategy would be put to a shareholder vote at its annual meeting in May, the first of such measures among its peers.
Glasenberg took over as CEO in 2002 and became synonymous with the company, which went public through an IPO nine years later.
Over the past two years the company has grown to a new generation of leadership with a series of Glasenberg lieutenants who have retired or resigned.
Glasenberg has no intention of becoming the next president of the company. But the outgoing leader will remain a large shareholder, with a stake of nearly $ 4 billion.